Feed for tag: utxo
Move bitcoin UTXOs off-chain with Statechains
Statechains author @SomsenRuben gives several different depths of explanations for how statechains work including a short FAQ. Statechain aim to allow users to move bitcoin UTXOs entirely off-chain. Enables instant off-chain creation of Lightning channels, with the ability to easily add or remove funds, and more.
Predictive UTXO Management

Dmitry Petukhov presents a different approach to the UTXO consolidation problem called Organic Consolidation.

For UTXO-based cryptocurrencies, it is important to have the set of managed Unspent Transaction Outputs in optimal shape, because if you have too much small UTXO, you will have to create bigger transactions to send the same amount of funds, and hence pay bigger network fee, or even need to send several transactions to transfer the needed amount.

Typical approach to handle this is to do periodical sweep of UTXO, bundling them all together, at the time when network fee is low.

We implemented another approach, that does not require manual UTXO consolidation, and at the same time, conserves network fee - when fee in the network is high, the algorithm tries to use less UTXO per transaction, and when network fee is low, it will create bigger transaction, effectively performing UTXO consolidation along with regular payments. This organic UTXO consolidation allows to maintain healthy UTXO set automatically, without manual consolidation runs.

Consolidation of 4 Million Utxos at Xapo

Following the last few months of low transaction fees, many have used the opportunity to consolidate their UTXOs . Xapo, a company that makes an online bitcoin wallet, recently published a report on their experience consolidating millions of UTXOs.

The idea behind UTXO consolidation is essentially this: when your average outgoing payment is larger than your average incoming payment (or when they’re the same, but you’re batching outgoing payments), you’ll often have to combine many UTXOs in order to fund an outgoing transaction, which increases the size of your transactions and hence the fees you pay. By consolidating UTXOs in advance, you can combine inputs ahead of time, giving you more control over when most of those costs are incurred. If you can do it when fees are low, that lets you reduce those costs pretty substantially.

Read the article here